Aruba, december 5, 2013 - European Commission vice-president Joaquin Almunia describes the rate-rigging as "appalling examples of misconduct". The European Commission has fined eight banks - including RBS - a total of 1.7bn euros (£1.4bn) for forming illegal cartels to rig interest rates. The cartels operated in markets for financial derivatives, which are products used to manage the risk of interest rate movements.

Two of the eight, Barclays and UBS, were excused their financial penalties for revealing the cartels' existence. The Commission said it was shocking that competing banks were in collusion.

UBS and Barclays stood to pay the largest fines of 2.5bn euros and 690m euros, but avoided paying anything because they assisted the investigation. A number of banks were engaged in the rigging of interest rate products intended to reflect the cost of interbank lending in euros, while another group fixed prices for products based on the Japanese yen.

The rates are used to set the price of trillions of dollars of products, including mortgages. Some were involved in both markets and more than one cartel, including RBS, which was fined a total of 391m euros (£325m).

'Scandal'

Aside from RBS, Barclays and UBS, the other organisations involved were Deutsche Bank, which received the biggest fine of 725.36m euros, Societe Generale, JP Morgan, Citibank and the brokers RP Martin. Banks that have not yet settled fines but are being investigated are HSBC and Credit Agricole, as well as JPMorgan, which accepted a fine for rigging in one market but not another.